STVM TUTORIAL

PRESENTATION
08/03/2017
TUTORIAL 4

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Pearson case

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Pearson Divestment Strategy

July 2015 sold FT Group for 844 million

August
2015 sold 50% stake in the
economist for 469m.
November 2015 announced rebranding,
creating new logo, 100% focus in education
2017proposing to sell 47% stake to penguin
random house for 1.2bn
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 Pearson in 2017
"The education sector is going through an unprecedented period of change and
volatility," Pearson said. Failing demand from bookstores, fewer students
enrolling at American colleges led to the sharp decline in the profit

With the group fearing that textbooks and other educational

equipment would enter terminal decline, Pearson took the bold
step of changing tack.
Plan was made as fighting fire with fire.
Those sales don't look too smart now.
Reduced the borrowings but left behind the space for share
buyback.
Investors have no visibility of where the company goes in 5 years
Last three months of 2016 30% falls in sells.
Divestment plan didnt workout as planned.

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What should they have done differently ?

Scenarios before The Rhode Island initiative:

1- From The beginning the threat of free online books was real and
buttering: Pearson could opt for divestment and plough the capital
into a new successful investment; or
2- Could create a joint-venture with Amazon for creating Online
textbook platform and occupy most of the US share market of online
books.
Scenarios after The Rhode Island initiative:
Discuss a partnership with the Rhode Island universities
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 Thank You
Presented By: Ramesh, Naoufel,
Mahfuzur and Fares